TVS Motor Reports Strong Q3 Results; Future Growth Expected with New EV Launches

TVS Motor has logged in an impressive third-quarter performance that aligns with revenue and Ebitda projections while surpassing profit expectations. A year-over-year revenue increase of around 26% was primarily driven by a surge in sales volumes, thanks to popular models and the anticipation of new electric vehicle (EV) product launches in the upcoming years. Notably, TVS Motor's successful models, such as Raider, Apache, Ronin, and Jupiter125, have stimulated its growth trajectory and positioned it to pace ahead of industry competitors.

Revenue and Profit Highlights

The company's revenue growth was complemented by a remarkable 40% year-over-year increase in Ebitda, assisted by gross margin expansions due to lower commodity prices and strategic price rises throughout the year. The gross margin itself saw a significant improvement to approximately 26.3%. Additionally, profit after tax soared by approximately 68% over the same period last year, outperforming estimates and benefitting from a noteworthy higher other income.

Strong Market Outlook

With a strategic focus on the burgeoning EV segment, TVS Motor is expected to maintain its lead against competitors by rolling out a range of innovative electric products. The company's projected compounded annual growth rate (CAGR) for revenue, Ebitda, and profit after tax stands at an estimated 17%, 21%, and 24%, respectively, from FY24E-26E. Factors such as robust engineering, research, and development capabilities, a solid domestic retail network, and increasing premium segment sales contribute to this positive outlook.

Investment Valuation

The firm is poised to generate a high return on equity between 27%-30% in the following years, based on strong fundamental projections. Despite a competitive market landscape, especially in the EV and mid-weight motorcycle segments, the company is still valued at a sustainable premium, with a target price showcasing a decent upside potential.

Potential Risks

However, there are risks, such as the potential for slower rural demand and possible delays in export market recoveries, which could adversely affect volume growth prospects and margins.

All investment decisions should be made with careful consideration and by consulting financial experts. The views expressed here are based on data and analysis and do not constitute financial advice.

TVS, Earnings, EV